Large DB plan sponsors focused on de-risking

MetLife’s U.S. Pension Risk Behavior Index has reached the highest value it has ever recorded.

The Index, which was started five years ago, reached 87 this year. Essentially, the index reflects what plan managers think about the risks facing their defined benefit pension plans and how successfully they believe they are managing those risks.

The study looked at 126 large corporate plan sponsors and measured their aptitude and attitudes about managing 18 investment, liability and business risks. It found that many of the largest DB plan sponsors are attempting to reduce, mitigate or transfer the risk affecting their plans.

Four in 10 respondents said they plan to take some kind of action regarding their plans this year because they want to reduce their liabilities, funded status volatility, contributions, pension expense and the cost of plan administration so they can focus on their core business.

Pension plan sponsors ranked "underfunding of liabilities and assets" and "liability mismatch" as the most important risk factors facing their plans.

Self-reported success ratings, which measure how strongly plan sponsors agree with statements that describe successful management of each of the 18 risk factors, reached an all-time high. Eighty-five percent of all ratings indicated success, compared to 75 percent in 2009. This means that plan sponsors believe they are successfully implementing comprehensive measures to manage each risk item.

The MetLife U.S. Pension Risk Behavior Index was conducted in conjunction with two research partners – Bdellium Inc. and Greenwich Associates – from October 2012 through January 2013.